NTPC jumps 9% after Q1 earnings; consolidated net profit declines 6% YoY

Shares of NTPC rallied around 9 per cent on the BSE on Monday after the company reported a 5.87 per cent year-on-year (YoY) decline in its consolidated net profit at Rs 2,948.94 crore for the first quarter of the fiscal year 2020-21 (Q1FY21).

The company's revenue from operations slipped 2.57 per cent YoY to Rs 26,194.76 crore during the quarter under review.

At 01:27 PM, shares of the company were trading over 8 per cent higher at Rs 95.55 on the BSE. The stock hit a high of Rs 96.20 during the day against previous close of Rs 88.40. In comparison, the S&P BSE Sensex was trading 0.2 per cent higher at 37,952.04 levels. 

Profit before exceptional item and tax rose 16.10 per cent to Rs 4,280 crore. Total tax expense rose 24 per cent to Rs 1,386.58 crore in Q1 June 2020 over Q1 June 2019.

NTPC reported an exceptional cost of Rs 836.76 crore in Q1 June 2020. The PSU enterprise said that in accordance with the announcement of Government, to allow a rebate of 20 per cent-25 per cent on the capacity charges, the company has approved Rs 1,510.47 crore for 2020-21. READ MORE

ICICI Securities note that NTPC's core return on equity (RoE) remained strong at 19.5 per cent, but fixed cost under recovery was at Rs 2.3 billion (Rs 1.2 billion in Q1FY20). On Q1FY21 consolidated profit basis, annualised earnings per share (EPS) comes to Rs 15.4, Q1FY21-end RoE at 12.5 per cent (pre-exception) and book value/share at Rs124. 

"Thus, NTPC is on course to achieve the FY21E target EPS of Rs 12.3/Rs 14.5 for standalone/consolidated entity (ex-rebate offered). Core earnings remain strong, which will be further strengthened by the robust commissioning pipeline and green initiatives," it said in a result review note. It has a "BUY" call on the stock with with an unchanged target price of Rs 165.